As a dividend investor myself, I’m always looking for my next trade. In order to find the right stock to buy, I use a free stock screener and I complete my analysis with my dividend stock analysis template. I wanted to share both tools so you can improve your stock research and build a strong portfolio.
One of the tools I use to identify dividend stocks for further analysis is the Fin Wiz Stock Screener. This is a free stock screener that allows investors to input reams of criteria to come up with a list of stocks to do further analysis on.
Here are the criteria I use to filter stocks:
Dividend Yield: over 3%
P/E ratio: Under 15
EPS Growth this year: positive
EPS growth next year: positive
EPS growth past 5 years: positive
Sales Growth past 5 years: over 5%
Payout Ratio: Under 70%
I wish this stock screener would present dividend growth over 1 year and 5 years but unfortunately that data is not available with a free screener.
This is how I populate my first screening list. However, I do not simply buy off the lists. I do further fundamental analysis on each and every stock I consider buying.
Once you have played with the stock screener for a sufficient amount of time, you will have some investing opportunities in mind. Note them in an excel spread sheet. Keep track of the data mining you just did (include financial ratios).
How To Build Your Own Dividend Stock Analysis Template
In order to build your own dividend stock analysis template, I suggest you start with my template and add what you think could be interesting for you. You might want to see if it fits in your dividend asset allocation or instead look more into the company management team. The possibilities are endless.
However, I would suggest you keep a simple dividend stock analysis template so you can run several stocks through the tool. This will help ensure you make good decisions.
So here’s how I think I will present my dividend stock analysis:
The Company Stock Description
Write down what the company does as you would describe it to a friend. Find out about their markets, their products, their strengths and their weaknesses. Understand the industry. If you don’t understand how the industry works (e.g. what is important to look at, specific consideration, how balance sheet should be analyzed), you should look into it more prior to looking at the stock itself.
I use a 5 year stock chart showing “moving average.” It gives me the overall trend of the stocks over the most recent economic cycle. Dividend stocks are obviously more interesting when they are trading on an upwards trend. If you use Google Finance, you can also get the dividend payment on the graph.
The Company Ratios and Financial Info
Numbers are very important, we all know that. I have already explained some dividend key ratios but there is more to it. Here are some of the metrics I use for each analysis:
Current Dividend Yield;
5 year Dividend Growth; and
1 year Dividend Growth
Return on Equity;
Earnings Per Share; and
Debt to Capital Ratio.
Trend (technical analysis).
Upcoming opportunities and dangers
Search around the web to find recent news about the stock. Look for potential opportunities (company projects, R&D, potential merger/acquisition) and dangers (competitors, economy, laws, etc.). This will provide a basic understanding of where the company is heading in the future. You will then be in a better position to see if this dividend stock is suitable for your portfolio or not.
With this quick but complete dividend stock analysis template, you will be in a better position to pick the right dividend stock for your portfolio. Make sure to review your picks once a year to make sure they continue to show the reasons why you bought them in the first place.
If you are looking for more information on dividend investing, I suggest you download my Free Dividend Investing eBook. This is a complete resource for beginner investors.